Correlation Between Redfin Corp and Modiv

Can any of the company-specific risk be diversified away by investing in both Redfin Corp and Modiv at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Redfin Corp and Modiv into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Redfin Corp and Modiv Inc, you can compare the effects of market volatilities on Redfin Corp and Modiv and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Redfin Corp with a short position of Modiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redfin Corp and Modiv.

Diversification Opportunities for Redfin Corp and Modiv

0.38

Correlation Coefficient

Redfin Corp  Modiv

Weak diversification

The 3 months correlation between Redfin and Modiv is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Redfin Corp and Modiv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modiv Inc and Redfin Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Redfin Corp are associated (or correlated) with Modiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modiv Inc has no effect on the direction of Redfin Corp i.e., Redfin Corp and Modiv go up and down completely randomly.

Pair Corralation between Redfin Corp and Modiv

Given the investment horizon of 90 days Redfin Corp is expected to generate 4.71 times more return on investment than Modiv. However, Redfin Corp is 4.71 times more volatile than Modiv Inc. It trades about 0.08 of its potential returns per unit of risk. Modiv Inc is currently generating about 0.07 per unit of risk. If you would invest  794.00  in Redfin Corp on December 28, 2024 and sell it today you would earn a total of  228.00  from holding Redfin Corp or generate 28.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Redfin Corp  vs.  Modiv Inc

Redfin Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Redfin Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Redfin Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Modiv Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Modiv Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Modiv may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Redfin Corp and Modiv

The main advantage of trading using opposite Redfin Corp and Modiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redfin Corp position performs unexpectedly, Modiv can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Modiv will offset losses from the drop in Modiv's long position.

The idea behind Redfin Corp and Modiv Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.